While Congress is still trying to reach a consensus on marijuana banking reforms at the federal level the Governor of New York signed legislation to make it easier for financial institutions working with state-licensed clients.
This new law allows the Office of Cannabis Management to share information with financial institutions about licensees and applicants for marijuana businesses. It is intended to simplify reporting obligations. The licensees or applicants would have to first consent to the information sharing.
Governor Kathy Hochul (D) signed the measure into law last week, after it was sponsored by Senator Jeremy Cooney and Assemblymember Crystal Peoples Stokes (D). Kathy Hochul (D).
According to a memo explaining the bill, “This will give financial institutions access to verify financial and personal information of their potential cannabis clients.” It will make it easier for financial institutions to comply with federal reporting requirements and improve compliance of ‘Know your Customer’.
Big News! This bill is a first step to enabling cannabis businesses to get the funding they need. It reduces lag time because it allows financial institutions to directly work with OCM in order to obtain necessary information. pic.twitter.com/jTRqLrFHsC
Senator Jeremy Cooney November 22, 2020 HTML0
Because marijuana remains a federally illegal, Schedule I substance, banks are required to comply with complicated anti-money-laundering laws and file so-called suspicious activity reports for every cannabis-related transaction. The memo states that “the burden of additional reporting and compliance measures prohibits most financial institutions to bank cannabis companies, even if they wanted to”.
The New York law will not affect federal banking requirements, but it is meant to ease the process and to expand the access to banking services for the fledgling adult use cannabis industry in the state.
The bill memo states that businesses often have to handle large sums of cash when they are unable to obtain banking services. This puts workers and the general public in danger.
Access to financial services affects public safety as well as economics. Cash businesses can be used for money laundering or other criminal purposes. This undermines public policy goals of creating safe, regulated and legal markets. It also creates safety concerns for cannabis workers who handle large sums of cash.
It says that the new legislation furthers the social equity goals of the state, “by removing financial and systemic obstacles that can prevent people from participating in the market with safety.”
Hochul also signed a separate marijuana law to provide relief for New York City marijuana companies that are currently unable to make federal deductions due to an Internal Revenue Service code (IRS) known as 280E.
Although Hochul signed last year a separate bill that included provisions that allowed state-level cannabis businesses to deduct tax — a partial remedy for the ongoing federal problem– New York City’s own tax laws were not affected by this change. This new measure aims to close that policy gap.
Legislators in Albany are also considering legislative fixes to the ongoing problems that have arisen with the implementation of legalization. In an October hearing for instance, the group discussed issues such as the state’s THC tax, enforcement measures to reduce the illicit market, licensing priorities, preventing children from accessing cannabis, and laboratory testing methods.
In recent months, frustrations about New York’s marijuana program have increased as regulators worked to create a market which prioritizes social justice, by awarding conditional licences to those who have been most affected by prohibition. The process is slow. Meanwhile, illicit cannabis businesses are proliferating. lawsuits temporarily stopped cannabis licensing and further complicated the issue.
Regulatory agencies are taking steps, some of which are controversial, to broaden the access to legal markets. The state Cannabis Control Board adopted a new rule in September that allows all applicants to apply for retail licenses, including large businesses outside of the state, and medical marijuana companies. Social equity applicants were outraged by the change, claiming it would undermine the state’s ambitious plans to prioritize small business and companies owned by those most directly affected by prohibition.
Expanding the eligibility to participate in the state’s cannabis market will likely speed up the opening of legal businesses, especially in New York City. Even though the state approved adult-use legalization for 2021, only two dozen legal stores have opened in all of New York.
A judge halted the licensing of Conditional Adult Use Retail Dispensaries (CAURD), in an August ruling. This prevented regulators from granting or processing new licenses for conditional adult use recreational dispensaries.
Cooney stated at the time that the decision of the judge to stop new cannabis licenses until the legal challenge is resolved, “disappointed him”.
In an effort to increase consumer access to marijuana that is legal, the OCM launched the Cannabis Growers Showcase, a program that allows growers and processors who are licensed to sell directly to the public.
accepted applications as soon as approved the program. In August, the Hudson Valley hosted its first pop-up. Another was held near the state fair.
In September, about 66 state legislators–about one-third of the state legislature as a whole–also sent Hochul an email urging her to sign a law that would permit licensed marijuana producers to sell their products to tribal retailers . This plan will provide a way for cannabis farmers to release surplus products.
In the letter, it is stated that growers have more than 250.000 pounds of cannabis they are not selling. Farmers who borrowed money and used all of their assets to grow these crops face financial ruin if we don’t act fast to find them an alternative market.
New York regulators continue to work on debunking the “false narrative” that marijuana is often contaminated with fentanyl, a “misconception,” that is “widespread,” despite a paucity of evidence. OCM has recently released a factsheet about the topic, stating that while fentanyl can be found in heroin and MDMA, the anecdotal evidence of marijuana being laced with fentanyl is unfounded.
The Office of Addiction Services and Supports also recently revised its guidance on THC testing in people receiving treatment for substance abuse disorder. It advises marijuana screening in cases when “the patient has indicated that a reduction or cessation of use of cannabis is part of their treatment goal.”
Colombia Senate Committee approves marijuana legalization bill, sending it to a floor vote next
The first time Marijuana Moment appeared was when New York Gov. Signs Bill to Ease Marijuana Banking Compliance As Congressional Reform Drags on.
